Making Productivity Soar
Secret Ingredients for Blending American and Japanese Management Technology
M.S. Caspe Co.
Project management is a technology for controlling the multidisciplinary specialties that must be combined while working on a complex project. The basic elements of project management are people and decision-making. The link between the people in a project organization and the decision-making process is shown in Figure 1 as communications. Communications serve to build coordination and commitment, the key elements of productivity.
The authors have never experienced a contract that did not have budget and time enough to do the job correctly the first time. Productivity is frequently impaired in the design and construction industries because of our failure to make decisions that are not later changed:
- Due to false starts,
- Due to late information,
- Due to errors of omission or commission,
- Due to changes of mind after the work is underway,
- Due to faulty communication and/or faulty coordination, or
- Other costly delays that impact upon the work effort.
Figure 1 Elements of Project Management
The wasteful process of performing work that is later voided is all too common. Projects become an iterative process in which we are continually changing criteria long after production has begun. No one person can be faulted for these changes. They seem to issue on a regular basis from owner, designers, regulatory agencies, vendors, and constructors.
If we are to reestablish a high level of productivity in industry we must begin to learn the value of a team effort where all parties are dedicated to “getting it right the first time.” We must not only know how to plan our work (we are already effective at that) but must also learn how to get people committed to each element of the plan’s work breakdown structure. In addition, we must learn how to monitor each element of the plans at the level where monitoring can most effectively build recommitment to stated objectives. That level is at the grass roots, where frontline supervisors can take immediate action because they have their hands upon the tasks being performed.
Commitment is not simply a matter of committing to costs and schedule targets. In fact, these are the relatively easy commitments because they are quantifiable and can be monitored with the support of a computer. The more difficult commitments are those involving technical decisions that require value judgments about a myriad of matters relating to functional performance of the completed project, quality of work, regulatory restraints, contract terms, and the contract administration of liabilities, profits, and incentives.
It is here that we will attempt to blend American and Japanese management technology to reach a balanced understanding of what is an ideal method for defining the supervisor’s role in project decisionmaking. The goal is to strike a proper balance between:
- The typical American attitude of forging ahead with implementation as rapidly as possible in order to attain potential efficiencies through fasttrack construction, and
- The typical Japanese attitude of delaying implementation until a consensus (100 percent commitment) is achieved at all levels of management in order to attain harmony.
Figure 2 is an exaggerated depiction of the differences between American and Japanese styles of decision-making. This article will identify the details of a compromise between these extremes. It is a means that is designed to capture the best of both systems, namely the efficiency of project management on a fasttrack basis and the harmony of building commitment at all levels of both the project organization and the functional organization. The end results of the planning process will be more than a list of tasks, budgets, and schedules; it will also include a definition of the decision-making process to which all supervisors are committed.
Figure 2 American and Japanese Styles of Decision-Making
Motivating People to Perform
To motivate people to perform, they must first be committed to the project objectives. The key to committing people is in dividing contracted project objectives into component elements of work and having associated budgets and schedules. By specifically assigning these elements to line supervisors for small working groups and giving them an input to the planning process, commitment is born.
However, commitment is not static. To manage, one must either recommit subordinate supervisors to the planned goals on a regular basis or have them forecast deviations from the planned objectives as early as possible. Such projections, when made in advance of the expenditure of resources, can frequently incite the negotiation of an alternate solution before it is too late. For example, by reducing the level of detail that is to be accomplished or by clarifying what was a misunderstanding on the part of a subordinate it is possible to correct what otherwise would have resulted in a waste of effort.
Indeed, the primary function of a Management Support System (MSS) is to promote communication between production supervisors in as simple a manner as possible without consuming significant quantities of their valuable production time. Once this goal is understood the operation of an MSS for a design or a construction project is quite simple. This will be demonstrated by an example of a consistent planning and monitoring system that is directly related to the project’s organizational structure.
The most cost-effective place to manage work is at the grass roots level. First-level supervisors are in the best position to make rapid decisions that are based upon detailed knowledge. Management by Objectives (MBO) makes each supervisor a minimanager responsible for quality performance, on time and within budget. In addition, this on-the-job training is the best way to build qualified managers.
MBO enables each production team to work towards identifiable goals in terms of time, cost, and quality of work. In the project environment it is relatively easy to provide each production team the information it needs to manage its own performance and thereby become the master of its own performance. Hence, the following incentives can exist at the production level to spark the pursuit of task objectives:
- Desire for a strong performance evaluation,
- Professional pride of the team,
- Desire to attain greater responsibility on future projects,
- Competition with other teams, and
Projects start when commitments begin to be made, not just after contracts are signed. Commitments begin long before a contract or work authorization is signed. Many commitments are made in proposals, presentations, meetings, and negotiation sessions.
How these commitments grow within an organization is most important. Ideally, commitments to a plan of action will grow up from the supervisors who must perform the tasks. Supervisors are committed in terms of task objectives, task budgets, and task schedules. These will be coordinated and renegotiated at the senior management level before the firm makes its initial commitment to the management.
The company commitment or contract plan can then be made up of task-level commitments (i.e., the Work Breakdown Structure (WBS)) on the part of those who must implement that plan on a daily basis. During negotiations, the strengths and limitations of the firm’s position are known by its negotiators and tradeoffs can be made intelligently.
With this successful conclusion of negotiations with the owner, the contract terms can again be broken down to the task-level as an action plan. If they are to be effective, action plans should have such attributes such as the following:
- Action plans should be simple and concise, containing only that level of detail which is needed to manage,
- Action plans should have a WBS which is directly related to the hierarchy of the project organization that is to implement the plan,
- Action plans should be supported by a monitoring system that is related to the hierarchy of the project organization so that information is distributed on a need-to-know basis,
- Budgets and schedules should be in approximate balance with the task objectives,
- Supervisors should be given a contingency fund at each level of management and should be encouraged to manage their bottom line, recognizing that underruns and overruns are expected to occur on line items,
- Action plans should be regularly disseminated to task supervisors at each level of the project organization so that they can be committed and recommitted to their objectives, and
- Forecasts of work remaining to complete should “rollup” through the organization from the grass roots level to top management and to owners. Progress reporting is best done by presenting the bottom line of each subordinate supervisor’s report as the progress report for the next level of management.
In those cases where the task supervisor cannot be identified during the precontract planning phase or is not available due to other commitments, a senior specialist should evaluate the commitment for planning purposes. However, at the start of the activity, “negotiation” should take place with the assigned supervisor to gain his commitment or to modify the work plan in a manner that is acceptable to his project supervisor. Even where the task is admittedly difficult, a commitment to trying is required before resources are expanded.
Action plans must be supported by a simple monitoring system that provides concise information in a timely manner. A simple monitoring system means that no production supervisor should be required to spend more than 30 minutes per reporting period away from his production efforts in order to support the monitoring (i.e., managing) of his work. Concise information suggests that a supervisor having six subordinates should receive a progress report having six lines on it, defining the bottom line for each of his subordinates. Timely information means that the information should be provided within one or two days after the close of a monitoring period.
In establishing a monitoring system it is necessary to determine horizontal headings for progress reports, cost reports, financial reports, and expediting reports. It is of equal importance to decide the level of detail that will appear vertically and to whom that information will go. Therefore, it is recommended that every item to be monitored be proven as necessary to manage. If it is only needed for institutional memory the item should be deleted.
Consistency between the planning system, the organization, and the monitoring system is necessary. To demonstrate this consistency and to show how it fits into both the planning and monitoring of construction activities, see the relationships in Figure 3. The planning system is shown as a sequence of steps which are normally set up in a series of forms, one for each step. The primary planning documents are as follows:
- In design it is the Drawing Control (or an Activity List),
- In procurement it is the List of Materials and Permanent Equipment, and
- In construction it is the Activity List.
Figure 3 Relationships Among the Planning System, the Organization, and the Monitoring System
The manner in which these three primary planning tools are used to generate both budgets and schedules and to then allocate resources should be clear. Note, however, the bottom line or the starting point for the monitoring sequence is always identical with the primary planning document shown on the top line as the start of the planning sequence. There should be a consistency that causes project people to monitor the same commitments that were made in the plan at the grass-roots level.
For example, in design where the drawing control is the primary planning document, the monitoring function of what remains to complete each element of work should be made against that same drawing list. In most instances this first level of management reporting is set up on a manual basis, without computer support. The raw information of Manhours Remaining To Complete and Date of Completion for each drawing is written directly on the drawing control and then passed up to the second level supervisor at specified reporting dates, usually related to the collection of time cards.
The progress reports that are issued to the second level of management are usually automated reports that compare the planned commitments for each task (Cost and Schedule) with the Expenditures To Date and the Projections To Complete. These progress reports arrive concurrently with the handwritten projections (the drawing control in this example) from the subordinate supervisors. Deviations from the plan can then be identified rapidly and communication can begin. The primary function of an MSS is to promote communications among supervisors in the production organization. Each element of the MSS should be designed so that the responsible supervisor either:
- Recommits to the project objectives for that component task in a very simple manner, or
- Identifies forecasted overruns (in time and/or in budget) before the resource is expended (that is, while there is still time to take corrective action).
Progress reports present concise information to each level of management. The validity of the information is high because the input comes from the front-line supervisors who are closest to the work and then moves to higher levels of management. This provides for reliability due to the many individual inputs to the monitoring system. In addition, since the recommitments are concerned with short-term objectives (i.e., due to be complete within weeks) the effects are close at hand and realistic forecasts can be anticipated. The best place to correct deviations from a currently approved objective is at the front-line supervisory level because only at this hands-on level can immediate action take place, in an environment that is void of recrimination. Since communication is directly between line supervisors and information is provided to each level of management with an appropriate level of detail, corrective action can become self-motivating.
Figures 4 and 5 identify processes of committing and recommitting project production supervisors to task objectives. There are two categories of resources, fixed measurement (Figure 4) and budgeted (Figure 5). With fixed measurement resources (such as the volume of concrete or the weight of steel to be erected) the magnitude of the resource is known in advance of starting the task and only the time element has to be managed. The task supervisor has only to be committed to the start and completion dates for the activity and, once the activity has started, the only recommitment required is to the forecasted date of completion.
Figure 4 Monitoring of Fixed Measurement Resources
With budgeted resources, projections are more difficult. Budgeted resources do not have a predetermined usage of the resource being monitored. An example is where cranes are budgeted for two months on the job and by the third month they still cannot be released. A projection is needed to forecast how much longer each crane will have to remain on the site.
Figure 5 Monitoring of Budgeted Resources
Design is another example of a budgeted resource in which it is necessary to forecast not only the date of completion but also the manhours remaining to complete. With budgeted resources there is no reason to terminate the project until the task is complete because an incomplete task has little value. We must ask the task force supervisor, say, in the design of a mechanical system, to review each drawing listed on the drawing control and to forecast both the manhours and the time remaining to complete each element of work.
This forecast is the supervisor’s recommitment to the task at hand. It is made independently of data on expenditures to date, by objectively looking at the status of each primary element of the plan (that is, the actual drawings) and estimating with more and more accuracy as the work progresses. Note that forecasts should always be made in units of measure (e.g., manhours) that are consistent with those of the plan so that direct comparisons can be made. Whereas productivity in construction can be measured in manhours per ton of steel or manhours per yard of concrete, productivity in design may be measured in manhours per drawing.
The flow of typical Progress Reports that are used to provide simple, concise, and timely information on a need-to-know basis must be understood for fixed measurement resources (i.e., lump-sum contracts and unit price contracts) and budgeted resources (i.e., cost plus fee contracts and force account work). Reports are used for monitoring design and for monitoring procurement. In all cases the process of moving forecasts from the grassroots level (such as the drawing control or activity list) into progress reports and then into cost reports and ultimately into financial reports is crucial.
A final report that is relevant to building commitment is the expediting report. Expediting is a function that should cut across lines of design procurement and construction in order to track the sequential progress of activities at the detail level. By maintaining contact with the responsible supervisor for each activity the expeditor can coordinate the sequential flow of decisions and gain timely commitments from each supervisor and his production team.
The secret ingredients for making productivity soar relate to the development of front-line supervisors’ commitment and their respective production teams’ commitment. By providing simple, concise, and timely information (in formats that give direct comparisons of progress, productivity, budget, and schedule commitments), supervisors can identify problem areas early and can act to correct these problems without wasting time or budget. Only by getting in front of the problem and avoiding false starts can efficiency be improved.
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